IndexIdentification of the problemAnalyze the problem and implement the solutionMonitoring experienceContext of the actuarial workConclusionThe principles underlying the actuarial control cycle are: Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Identifying a business problem Addressing the problem or analyzing the problem to be able to implement solutions These actions are monitored and the process repeated if another problem is sufficient or the solutions do not work as expected. Therefore, it is a cycle. All these are performed in the context of actuarial work. Problem IdentificationIn terms of expected reserves for life insurance companies, companies have identified that there are a lot of uncertainties around the figures due to factors such as data error, underwriting risk, methodological risk, assumptions made, regulatory environment, physical environment, disease onset, and so on. Because of these uncertainties, companies sometimes end up paying more than they reserve, which impacts profits and could even lead to insolvency, depending on the size of the variance. For example, the case where not all the data involved in the analysis of a portfolio has been used for reserving may result in an insufficient reserving situation. Furthermore, if we are overly conservative with mortality assumptions and do not tailor the mortality table to represent the target population, we may underestimate our cost of death. There may also be cases where expenses are not allocated correctly according to policy and inflation is not considered correct. All of these cases and more can result in reserves being insufficient to meet future liabilities. Analyze the Problem and Implement the Solution One-way companies approached this problem to examine the impact on reserves if these assumptions were to be higher than assumed. Sensitivity and stress tests can be performed. This way, the company can also look at past experiences together to assess the level of variation. Thus, one way to deal with this problem is to add a risk margin to the obtained reserve. This serves as a buffer if the actual experience is higher than the calculated expected reserves. It helps ensure that the company has made provisions for unexpected events. Regulators also help in this regard by ensuring that all company reserves are not below the 75% confidence level. In general insurance this is defined as a 75% probability of sufficiency. Monitoring experience It is one thing to establish a risk margin, it is also another thing to ensure that the level set is realistic for the company and still sufficient, especially for a company that is constantly expanding its portfolio. Some reasons to monitor experience are: review assumptions; be able to understand the trend behind the emerging experience and the factors that facilitate it; develop a history and trend of experience over time; assist in profit analysis; provide information to different Stakeholders such as regulators, shareholders, management and so on. Shareholders would be interested in this outcome as they would like to know the factors behind the profit and management should be able to justify the high risk margin set for the company. Ideally, we expect risk margins to be high when a company's portfolio is dominant in a high-risk area. The analysis of the experience, therefore,.